The clients had stored various valuable items in a safety deposit box at the bank since 2000. In 2013, the bank asked the clients to move to a new slot after it had difficulty opening their safety deposit box. The clients consented to the move and signed a one-page “Consumer Safe Deposit Box Contract.” In 2021, the clients were made aware that their safe deposit box had been “drilled” and noticed that many of their valuables in the safe deposit box had gone missing. The clients filed suit against the bank in a federal district court, where the case was promptly dismissed due to the court granting the motion made by the bank to compel arbitration. The bank claimed the arbitration clause was referred to within the Consumer Safe Deposit Box Contract the clients signed. The clients appealed the decision to the U.S. Court of Appeals for the Ninth Circuit.
In Fong v. U.S. Bancorp, No. 23-16186, 2024 WL 3439584, 2024 U.S. App. LEXIS 17533, (9th Cir. July 17, 2024) (opinion not yet released for publication), the U.S. Court of Appeals for the Ninth Circuit vacated the district court’s decision and remanded the case. First, the court noted that the bank, as the party attempting to enforce an arbitration clause, “bears ‘the burden of proving the existence of an agreement to arbitrate by a preponderance of the evidence.’” Knutson v. Sirius XM Radio, Inc., 771 F.3d 559, 565 (9th Cir. 2014). The bank argued that the agreement to arbitrate was included in the Safe Deposit Box Contract through a reference to a separate document, the “Safe Deposit Box Lease Agreement.” The court stated that it would “not have been clear to a reasonable consumer under the circumstances” that the Safety Deposit Box Contract was an entirely new agreement. Due to the clients’ prior dealings with the bank and the fact that their safe deposit box was only getting a new slot, it was reasonable to assume that the Safe Deposit Box Contract referred to the initial agreement made by the clients’ when they opened their safe deposit box in 2000. Second, the court addressed whether there was a “genuine dispute of material fact” that the bank had ever provided the clients with the Safe Deposit Box Lease Agreement. The bank employee who had dealt with the clients in 2013 had no memory of assisting them, and the clients claimed they had not been given the Safe Deposit Box Lease. The court held that the issue of whether the clients received the separate document must be resolved before it could be properly determined whether the arbitration agreement was enforceable. Thus, the court vacated the order compelling arbitration and remanded the case to the district court for further proceedings.
By Ian Wallace: [email protected]
Edited By Maycee Redfearn: [email protected]
Edited By Ashley Boyce: [email protected]
Edited By Hayden Mariott: [email protected]